Australian mining mogul's rise and fall

Jan 11 2013 09:28

Sydney/Singapore - Nathan Tinkler, whose meteoric rise made him Australia's pre-eminent coal baron, is set for a crash-landing as his main financial backer moves closer to a sale of the former billionaire's stake in Whitehaven Coal, sources said.

The sources told Reuters that China's Shenhua Group Corp and an unidentified Japanese firm have approached Noonday, the asset arm of US hedge fund manager Farallon Capital Management LLC, about buying Tinkler's one-fifth stake in Whitehaven, worth about A$690m ($729.19m).

A spokesman for Tinkler on the Whitehaven issue declined to comment when contacted.

A consortium led by Noonday, which includes Credit Suisse , extended A$600m in loans to Tinkler pledged against his stake, which has slumped in value from A$1.1bn at its peak after demand for coal from China weakened.

The loss of the Whitehaven stake, which represents the bulk of Tinkler's wealth, would leave the former mine pit electrician with private shelf companies that have no major assets.

It would also be an embarrassing reversal from just a few months ago when Tinkler tried, but failed, to use his voting power to oust most of the Whitehaven board, claiming mismanagement. Tinkler attempted the board spill after dropping a $5.5 billion bid in August to take the company private.

Tinkler, who turns 37 on February 1, has already lost the title of Australia's youngest billionaire almost as quickly as he got it, shedding some A$2m of paper value per day last year.

His sports and horse racing businesses are in trouble, as are his private jet and helicopter, and he faces lawsuits from the Australian Tax Office and private creditors over unpaid debts and disputed share deals totalling at least A$50m.

A source with direct knowledge of the Whitehaven issue said "Tinkler is dead" on a financial front. Noonday could have acted earlier, which would have hit Tinkler hard, but the firm is protecting its reputation for not destroying its counterparties, the source said.

Another source familiar with Tinkler's financial situation said Noonday had no choice but to sell the 19.4% stake in Whitehaven, Australia's biggest independent miner.

Separate sources ruled out Idemitsu Kosan or Itochu Corp, which has a 10% stake in Whitehaven's key Maules Creek project, as the prospective but so far unidentified Japanese buyer partnering Shenshu.

Empire crumbling

Tinkler, who moved with his family to Singapore last year, turned a A$1m bet on an unfancied coal deposit in 2006 into a billion-dollar fortune in just two years.

The $5bn merger of Tinkler's companies Aston Resources and Boardwalk Resources with Whitehaven in April 2012 crowned a rise built on Australian's once-in-a-century mining boom.

But cracks began to appear in his mining, sports and horse-racing empire in the second half of 2012 as coal prices began a downward spiral, appearing to confirm views by critics that Tinkler had borrowed too much, too fast.

The embattled entrepreneur has successfully paid off debts worth millions of dollars in recent months to stave off some creditors and avoid public scrutiny of his finances through the courts, including an Irish race horse stud owned by Sheikh Mohammed bin Rashid al-Maktoum, the ruler of Dubai.

But other major creditors, including the Australian Tax Office, are continuing with a handful of cases against some of his web of more than 40 companies. Tinkler is expected to give evidence in at least one hearing next month.

Rubbing salt into the wound, his former close friend and business associate Matthew Higgins is suing Tinkler for royalties over the coal tenement deal that made his fortune.

Tinkler's Patinack Farm, until recently Australia's largest horse racing business, has shrunk just five years after he splurged A$18.5m on a record 58 horses in a single week.

Almost 400 horses have been sold, including prize stallion "All Too Hard".

His Hunter Sports Group, home to the Newcastle Knights rugby league club and the Newcastle Jets A-League soccer team, has until January 21 to provide an independent audit of the Knights' books to an industry board after delayed payments.

The once high-flying Tinkler is also scrambling to find funds to refinance an $11.9m debt on his private jet and helicopter before receivers assigned to his private company TGHA Aviation sell them off to repay creditors.

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